Revenues dip at Kcom; Halbert to remain in chair

Broadband and communications provider Kcom says a decline in its business focused arm hit overall revenues last year but profits were up.

For the year to the end of March revenue was £387.3m, just short of the consensus expectation of £390m and 2% down on the prior year.

Profit before tax surprised on the upside at £51.1m, a 24% gain on the prior year and ahead of the £50.97m expected by the market.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Kcom is broadly split into two segments. Its "KC" operation provides telephony and broadband services in East Yorkshire. This side of the business is doing well with revenues increasing 1.1% to £103.6m as businesses demanded higher bandwidth services. The consumer side of KC did well by offering more packaged or "bundled" services and the company says its roll-out of ultra-fast 100 megabits per second broadband in parts of Hull and East Yorkshire will be available to 15,000 homes by the end of the year.

The other side of the business, known by the group name of Kcom, has had a more difficult time. Kcom provides networking and communications solutions to business across the UK and includes Domino's Pizza and Morrisons as clients.

Overall revenue at Kcom declined by 2.7% to £289.3 million with the group saying "a reduction in lower margin premium rate services and other non-core activities" offset early growth. Kcom did however maintain margin to sales at 11%, delivering underlying earnings of £31m, down slightly on the £32m produced last year.

The final dividend has been announced at 2.67p per share, delivering a full year figure of 4p, just below market expectations of 4.17p.

The group said that it would once again be seeking to extend the tenure of Bill Halbert, Executive Chairman, after consultation with its largest shareholders. Halbert will seek re-election to the board at the fir's annual general meeting in July.

Kcom shares are down 1.4% so far in 2012.

BS